Wednesday, May 11, 2016

First Lawsuit Filed Challenging FDA Deeming Regulations

Yesterday, the first lawsuit was filed which challenges the
legality of the FDA’s electronic cigarette deeming regulations. The suit was
filed in the D.C. District Court by Nicopure Labs, a maker of vaping devices
and e-liquids. The complaint alleges that the FDA deeming regulations are in
violation of the Administrative Procedure Act (APA) and the First Amendment.

There are three claims under the APA:

1. The FDA has
interpreted the term “tobacco products” way too broadly and in a way which is
inconsistent with the Tobacco Act.

Nicopure points out that the FDA
has construed the term “tobacco product” so broadly that it includes not only
e-liquids which actually do contain nicotine, but also batteries, wicks,
electronic displays, and glass vials, which do not contain nicotine and are not
derived from tobacco or any constituent of tobacco.

Comment:
This seems like a good point. If I am a manufacturer of batteries for electric
toothbrushes and people start using my batteries in their vaping devices, and I
then put a note on my web site stating that these batteries may be used in
vaping devices, I am now a tobacco product manufacturer under the regulations
and must comply with all provisions. This means I must label my product as a
tobacco product (falsely stating that it contains tobacco) and furthermore,
that I cannot make any changes to my batteries after August 8, 2016, even if
those changes are critical safety improvements, unless I receive pre-market
authorization approval from the agency. If I am a manufacturer of glass vials
and I am reasonably aware that many consumers are using these vials to store
e-liquids, I could possibly be deemed to be a tobacco product manufacturer. If
I advertise that these glass vials would make good containers for e-liquids,
then I am most definitely considered a tobacco product manufacturer.

2. The FDA regulations
are arbitrary and capricious and impose a huge burden on businesses but without
any rational connection to the protection of the public’s health.

Comment:
The best example of this is the setting of August 8, 2016 as a date beyond
which manufacturers cannot make any changes, including safety improvements, to
their products. That date is arbitrary, as is the treating of products on the
market on August 8th systematically different from products on the
market as of August 7th. Moreover, there is no rational basis for
imposing huge burdens on businesses through the pre-market tobacco application
requirements because these requirements do not directly advance any public
health objective. In fact, the FDA has failed to show that there is any
substantial threat to the public’s health posed by vaping products or that its
regulations will mitigate that threat. There is certainly no rational basis for
preventing companies from making safety improvements to their products after
August 8th.

3. The FDA’s
cost-benefit analysis grossly underestimates the costs while exaggerating, and
failing to even quantify the benefits of the regulations.

Comment:
This is also a valid point. The deeming rule estimates that there will be 750
PMTAs submitted each year. However, one company alone will submit more than 750
PMTAs. A single company that sells 190 flavors of e-liquid, each in four
nicotine strengths, will have to submit 760 PMTAs. That’s just a single
company. It seems clear that an accurate cost-benefit analysis would have
revealed that the costs of imposing these regulations are astronomical. Moreover,
the FDA did not even quantify the benefits of the regulations. The agency
pointed to no evidence that vaping products are causing public health harm. Nor
did it quantify any of the supposed harms. It is difficult to see how the
hypothetical benefits of regulation, which couldn’t even be quantified, justify
the imposition of literally billions of dollars in capital costs on the vaping
industry, including thousands of small business owners.

4. The regulations
violate the free speech rights of the company under the First Amendment by
prohibiting it from making truthful and non-misleading statements about its
products, and without any legitimate government interest.

Comment:
I believe this is the strongest of the legal arguments. Without question, by
subjecting vaping products to the modified risk provisions in section 911 of
the Tobacco Act, the FDA has prohibited companies from claiming, truthfully,
that their products are safer than real cigarettes, contain no tobacco, produce
no smoke, or produce aerosol that contains levels of certain chemicals that are
much lower than in tobacco smoke. These are all accurate and non-misleading
claims that are in fact essential for consumers to understand, and these are
the primary benefits of the product that companies need to be able to convey.

Moreover, the prohibition of these
truthful claims advances no substantial government interest. In fact, it
doesn’t advance any government
interest. What government interest is there in banning companies from informing
consumers that these products do not contain tobacco? How does that threaten
the public’s health? The truth is that not
informing consumers that these products do not contain tobacco is what will
threaten the public’s health. It will hide from the public critical information
necessary for people to make rational, informed decisions in choosing between
smoking real, tobacco cigarettes and vaping fake, non-tobacco ones.

Because the FDA is prohibiting
truthful claims that are in no way misleading, the test of whether these
restrictions will survive First Amendment scrutiny will certainly be under
strict scrutiny, or under the Central Hudson criteria. The government will have
to show that these restrictions are based on a substantial government interest
and that they will effectively advance that interest.

But I can think of no government
interest in precluding a company which makes a much safer product than
cigarettes from informing its consumers that its product is safer. I see no
government interest in forcing companies to hide from their consumers the basic
fact that their products do not contain tobacco. There is certainly a
justification for forcing ingredient disclosure, but I cannot think of a
legitimate interest that is served by forcing ingredient non-disclosure. I
think it will be quite clear to the court that companies have a right to
voluntarily disclose their ingredients and that the government has no interest
in prohibiting that unless such disclosure would somehow be misleading. In this
case, not disclosing that these
products do not contain tobacco and do not produce smoke is what would be
misleading.

The Rest of the
Story

This is the first of what I imagine will be many lawsuits
challenging the deeming regulations. The First Amendment challenge I think is
extremely strong. There is a high likelihood of success on legal grounds, and
enforcing the modified risk provisions would clearly cause severe and
irreparable harm to the vaping companies. Thus, I think there is a solid chance
that the court will grant injunctive relief and enjoin the FDA from enforcing
this aspect of the regulations while the full case is heard. Because of the
severability of the regulation provisions, only the modified risk provisions
would be subject to injunctive relief under this aspect of the complaint.

It is more difficult to predict what the court will do with
the APA claims. Of those, I believe the flawed cost-benefit analysis is the
strongest claim because it will be easy to show that the FDA greatly
underestimated the costs it is imposing on businesses. Essentially, the FDA
underestimated the cost by at least two if not three orders of magnitude. The
FDA estimated that there would be 750 PMTA’s per year. But the FDA itself
acknowledged that there are 4,600 vape shops that mix their own liquids.
Assuming, conservatively, that each vape shop sells only 10 e-liquid flavors,
this amounts to 46,000 applications. And this is just from small businesses. It
doesn’t include the large e-liquid manufacturers. Given the high likelihood of
success of this argument and the severe and irreparable harm that enforcing it
would produce, I think there is at least a solid chance that the court could
provide injunctive relief on this claim, which would temporarily enjoin the FDA
from enforcing the PMTA requirements.

The other two claims are compelling, but courts generally
give federal agencies a huge amount of discretion when using the “rational
basis” test.

The rest of the story is that Nicopure’s complaint outlines
several compelling arguments which demonstrate that the FDA has exceeded its
authority in its deeming rule in violation of the APA and in a way that cannot
stand scrutiny under the First Amendment. I’m certain that this is only the
first of many more lawsuits to come. This is not unexpected when a federal
agency puts onerous and financially prohibitive burdens on an industry that
result in a de facto elimination of the bulk of that industry.

About Me

Dr. Siegel is a Professor in the Department of Community Health Sciences, Boston University School of Public Health. He has 32 years of experience in the field of tobacco control. He previously spent two years working at the Office on Smoking and Health at CDC, where he conducted research on secondhand smoke and cigarette advertising. He has published nearly 70 papers related to tobacco. He testified in the landmark Engle lawsuit against the tobacco companies, which resulted in an unprecedented $145 billion verdict against the industry. He teaches social and behavioral sciences, mass communication and public health, and public health advocacy in the Masters of Public Health program.